Yes it can fail completely. You have two mutually exclusive failure modes on these things. On is the most common where the springs and holders give out and spit out, generally makes a lot of noise , but the clutch will usually hold, and then there's the elusive overload protection section hidden in the center that is basically a safety clutch built into the flywheel. This little ditty is designed to fail in the event of overload, exactly why is uncertain, but assumption is to possibly protect the ZF tranny which isn't the strongest thing on earth. If you use a stock organic clutch, and don't pull real heavy, chances are , you will never trigger this thing off, but if you mount a heavy duty clutch in the thing, the overload protection device, becomes teh weak link and will slip before the clutch will, and once that sucker has slipped one time, the flywheel is toast.
I found this out the hard way. IT particularly does not take kindly to getting heated up.
there are a number of very good reasons that so many of us have gone to various versions of solid flywheels
getting stranded is one of them